Goldman Sachs hit with IPO allegations

Reuters News Service

Published
5:30 am CDT, Friday, October 4, 2002

NEW YORK -- Goldman Sachs Group Chairman Henry Paulson Jr. won plaudits in the business press last June when he proposed a plan to put ethics back into the business mix, speaking before the National Press Club in a rare public appearance.

As head of the venerable 133-year-old bank, Paulson stood out amid the ranks of executives discredited by a string of scandals. But a congressional committee's revelation this week may knock Goldman off its pedestal.

"It can be pretty damning on a firm's reputation," said John Davidson, who helps manage $4.5 billion as head of Greenwich, Conn.-based PartnerRe Asset Management Corp.

Davidson, who's been in the business for 25 years and worked with Goldman for most of them, said he sees the alleged IPO practices as widespread.

In other recent securities investigations, the Securities and Exchange Commission has reportedly probed Goldman for "laddering" -- requiring investors to buy stock in the after market as a condition to IPO allocations. Investors have sued the bank for allegedly rigging IPOs.

Goldman, the biggest underwriter of IPOs during three of the last five years, has denied the allegations.